Microsoft and THOMSON multimedia Enter Into a Strategic Relationship On Interactive TV

July 30, 1998
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Redmond, Wash., July 30, 1998 — Microsoft Corp. and THOMSON multimedia today announced they have signed a memorandum of understanding (MOU) to develop and promote interactive and enhanced television products and services, and to accelerate the adoption of digital television globally.

As a part of this relationship, after due diligence and regulatory approvals, Microsoft proposes to take a 7.5 percent interest in THOMSON multimedia and one seat on the THOMSON board of directors, and also sit on a newly formed strategic committee of THOMSON multimedia. In parallel, NEC, Alcatel and DIRECTV Inc. will also enter into agreements and, after due diligence and regulatory approvals, propose to take a 7.5 percent interest each in THOMSON multimedia.

As part of this MOU, the companies will work to develop and promote new
“enhanced” televisions (eTVs), which include an electronic program guide and support for interactive television programs. Microsoft will provide HTML-rendering technologies based on the Microsoft® Windows® CE operating system for use in these eTVs. The new eTVs will provide consumers with an integrated TV receiver, in both analog and digital versions, that provides access to the types of interactivity only available today through set-top boxes.

Also, as part of the MOU, THOMSON will license and sell WebTV® set-top boxes under its RCA brand in the United States and the THOMSON brand in Europe.

In support of these efforts, Microsoft and THOMSON plan to collaborate on products and services related to the future of television with a common U.S.-based team. One focus of this effort will be the development of products and services for digital television that combine WebTV technologies with THOMSON technologies for satellite and cable operators.

“Microsoft believes that consumers can only benefit from the fruits of this relationship,”
said Craig Mundie, senior vice president, consumer platform division, Microsoft.
“THOMSON’s leadership in consumer electronics, combined with Microsoft’s desire and ability to provide technologies to enable digital television, is sure to bring products and services to the market that consumers will embrace and which will improve their entertainment experience with TV.”

“The time has come for the information technologies industry and the consumer electronics industry to combine their skills in order to offer to the mass market innovative products and services,”
said Thierry Breton, chairman and CEO of THOMSON multimedia.
“Our combined efforts will accelerate the emergence and the deployment of eTV, which for us is clearly based on interactive television and digital television. The strategic cooperation between Microsoft and THOMSON multimedia will make intelligent television happen and enable both companies to enter successfully the next century’s multimedia services arena.”

About THOMSON multimedia

Worldwide No. 4 in consumer electronics, THOMSON multimedia develops, manufactures and sells TV sets, VCRs, camcorders, audio and communications products, digital decoders, and DVD players, as well as tubes and other components for color TVs and

professional video equipment. The group is No. 1 in the United States and No. 3 in Europe. From its leadership position in its core consumer electronics business, the group has taken advantage of the convergence of the TV, information technology and telecommunications businesses to seize the leadership in the emerging markets for digital and multimedia products. THOMSON multimedia is particularly active in the development of new services linked to the TV set, such as electronic program guides, Internet access and interactivity features.

About Microsoft

Founded in 1975, Microsoft (Nasdaq
“MSFT”
) is the worldwide leader in software for personal computers. The company offers a wide range of products and services for business and personal use, each designed with the mission of making it easier and more enjoyable for people to take advantage of the full power of personal computing every day.

Microsoft, Windows and WebTV are either registered trademarks or trademarks of Microsoft Corp. in the United States and/or other countries.

Other product and company names herein may be trademarks of their respective owners.

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